Texas’ securities watchdog has halted operations of the three cryptocurrency firms
Texas’ securities watchdog has halted operations of the three cryptocurrency firms operating in the state following their attempts to deceive investors.
In a statement, the Texas State Securities Board said it entered a first emergency cease-and-desist order against Coins Miner Investment Ltd., a cryptocurrency investment promoter operating in Russia; DGBK Ltd., an offshore digital “bank” that claims it has developed hack-proof storage for virtual currencies; and Ultimate Assets LLC, a supposed cryptocurrency and foreign exchange trader.
“Coins Miner is soliciting funds from Texas residents by pretending to represent an established U.S. cryptocurrency platform,” the securities regulator said, adding it manipulates their email solicitations to make them appear as if they originate from Coinbase, a digital currency exchange based in San Francisco.
The supposedly United Kingdom-based firm also used images and video to delude state residents. For instance, a certain Ana Julia Lara, a person affiliated with Coins Miner, said she was a cryptocurrency trader for Coinbase. Lara also sent prospective investors a photograph of herself with Ripple’s president. But the person identified as Lara is a vice president of CoinTelegraph Media Group.
“The solicitation directs prospective investors to a website maintained by Coins Miner, where the company offers investments in programs tied to the mining of cryptocurrencies. On the site Coins Miner makes numerous fraudulent misrepresentations to try to make its investment offering appear legitimate,” the statement reads.
DGBK Ltd., or DigitalBank, is a Belize-based company which said it is creating a hack-proof device to store and transfer digital currencies. It is seeking funds to design a digital wallet for cryptocurrencies called Photon Encrypted Ledger Key which can be opened using an individual’s biometric data.
“DigitalBank is offering prospective investors both shares in the company and the opportunity to buy its own virtual currency, a digital token called DGBK. According to the company, investors who purchase the token now can earn a return of 1,900% once it is sold in an initial coin offering next year,” the watchdog said.
The investments offered by the company are unregistered securities under the state’s law.
DigitalBank is promoting itself by utilizing a 33-second video of Barack Obama wherein the former American president talked about technology advances which could enable hack-proof devices in the future.
“DigitalBank is telling investors to view the video to ‘try to understand what Obama in 2016 already understood about the company.’ The company embedded the video throughout its website, on social media, and in correspondence to investors,” it added.
Ultimate Assets is releasing online advertisements soliciting funds for its cryptocurrency and foreign exchange trading program. It is informing potential clients that an initial investment of $1,000 will become $10,000 in three weeks.
“Ultimate Assets and its representatives claim an initial investment in the trading program is fully guaranteed. Its investment contract says, ‘a refund will be issued in cases where [the] investment could not yield profits,’” the agency said.
While the investments offered are registered securities, Daniel Dishmon and John Jason Woodard, the people named in the cease-and-desist order, violated the Texas Securities Act by offering securities investments without being registered with the Securities Commissioner.
“Ultimate Assets, Dishmon and Woodard are also engaging in fraud by failing to inform investors of the regulatory, market, and technical risks in the trading of cryptocurrencies and foreign currencies,” it added.
Coins Miner did not reply to a request for comment as of writing, while Ultimate Asset could not be reached for a comment.
Ranca Romic, DigitalBank director, lashed back at these charges. “We don’t sell anything. No ICO. We are a software developer company. We planned maybe a future ICO in late 2019. But for the moment we are just developing the software,” Romic said.
“We just took emails of people that might be interested to invest in the future. The plan was to get back to those potential investors the moment we complete the full development and to cooperate with an investment firm that will legally arrange the ICO [initial coin offering],” she added.